The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their customer data practices and the use of algorithms and artificial intelligence to customize pricing for consumers.
On Tuesday, the FTC issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking insights into how such pricing strategies could affect privacy, competition, and consumer protection.
Companies often utilize advanced data tools, such as AI, to implement a strategy referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices to consumers for identical products depending on factors such as location, demographics, credit history, and online shopping behavior.
The firms contacted by the FTC are known for providing transaction, sales, and pricing services to some of the largest corporations in the United States and globally. Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software and analytics for several international chains, including Home Depot. Pros, which claims to offer AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to investigate the “opaque market” that enables businesses to profile consumers and impose targeted prices on products and services.
“Businesses that exploit Americans’ personal data risk compromising consumer privacy. Additionally, they may be leveraging this extensive pool of personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to understand whether companies are utilizing detailed consumer data to implement surveillance pricing, and the FTC’s inquiry will illuminate this intricate ecosystem of pricing intermediaries.”
The FTC is specifically seeking information on four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the impact of these practices on pricing for consumers.